Advice for Financing 3 Properties After Subdivision - Philadelphia Philly PA

2 Replies

I recently subdivided a property and need to acquire new financing...this is sort of a complex scenario (at least it seems like it to me), so any advice would be appreciated. I'm basically looking for confirmation that my plan makes sense and if not, some advice on how to proceed.

Basic Details:

I own a parcel with three buildings on it. A 3/1 duplex, a 1BD carriage house, and a vacant warehouse. All three buildings are recorded on a single deed. Due to the industrial zoning of the property our current financing is a commercial loan. 

Current Situation:

As of today we have executed three separate deeds and have separated the parcel into three distinct lots. Additionally, we have received zoning variances that allow for residential use of the duplex and carriage house. The warehouse has been approved for the construction of 6 residential uses.

Next Steps:

We are looking to acquire construction financing for the warehouse, but will not have the information necessary (full plans, bids, financials) to apply for financing for another ~60 days. 


I'm not entirely sure how our existing bank will view the creation of three deeds. This is a change to title and I believe they will require some adjustment to the existing commercial mortgage. Based on the terms of the existing lien and our experience with this bank, we are not looking to work with them going forward either way. My current plan is to immediately start looking to acquire conventional residential financing (30yr fxd) on the two rented buildings (duplex and carriage house) and then get financing for the warehouse construction in ~60 days. I believe I will need three separate mortgages now that we have three separate deeds.

Does this make sense? Is there something I'm not considering? Is there a better way to finance this project?

Please let me know if you've been through a similar process and any thoughts you may have.


It sounds like you will need to refinance one of the residential properties to pay off the commercial loan. Whether or not you need refinance the second residential property is up to you. The warehouse sounds like you are looking for a construction loan. You could use one or both of the residential properties as collateral. If you use one of the residential properties as collateral then it may be better to hold off on refinancing it as the construction lender may want to be in first lien position on both properties.

Have you lined up a prospective lender to determine their underwriting guidelines? 

Hi @Sita B.  

Thanks for the input. Using the two residential properties to collateralize the construction sounds like a good way to go. The biggest issue with doing so is the timing. Due to the subdivision, my worry is that we may be in default on our current loan. If that is the case, we will need to refinance out of the existing loan immediately but we are not ready for the construction loan yet. 

I have 3 prospective lenders in mind, but preliminary discussions with them have not yet occurred. My hope was to have a well formulated strategy and packet of information prior to opening discussions. Perhaps I shouldn't wait?

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